Favorable interest rates and a new business strategy bolstered earnings at CWM Mortgage Holdings Inc. last year.

It reported earnings of $14.3 million for the fourth quarter of 1995, 30% more than a year earlier.

For the year, earnings were $50 million, a 45% increase.

CWM is a real estate investment trust traded on the New York Stock Exchange. It is managed by Countrywide Credit Industries' top executives, and Countrywide owns 3% of the company's stock.

The mortgage businesses in which CWM engages include buying and securitizing jumbo and nonconforming loans. In this capacity it functions like the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp., but working with loans the two government-sponsored units do not handle.

CWM's master servicing portfolio increased $443 million during the fourth quarter to $9.4 billion. The company also added $177 million of loans to its portfolio to enhance core earnings.

Because of a drop in interest rates, loan prepayments at CWM were $370 million in the fourth quarter, up from $306 million in the third quarter.

The company split its construction lending division into two units in November, helping it diversify its sources of revenue and earnings, said Michael W. Perry, executive vice president and chief operating officer. One unit provides financing to builders, and the other finances home improvements and similar loans to consumers.

Because of the drop, warehouse lines of credit extended to mortgage banks were up 10% from the 1994 quarter. As of yearend 1995, the company had extended 116 warehouse lines of credit to mortgage originators. The credit limits total $343 million, of which $191 million was outstanding.

Separately, Countrywide Credit Industries said it added nearly 1,200 employees in 1995. The figure includes all subsidiaries.

Delinquencies for the company's servicing portfolio totaled 3.5% last month, up from 2.2%.

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